China pulls away from pack as favored destination for FDI
Shanghai. (Interfax-China) - Growth prospects, increasing disposable incomes, and an increasingly better educated pool of low cost labor are driving China's appeal among foreign investors, according to the latest survey conduct by global management consulting firm A.T. Kearney.
China is further widening the gap between it and the United States and other countries as the most popular destination for Foreign Direct Investment (FDI). Statistics from A.T. Kearney's Foreign Direct Investment Confidence Index, based on an annual survey of executive from the world's largest companies, indicated that over a third of all respondents had a more positive view of China than they had last year. China supplanted the U.S. as the largest recipient of FDI in 2002.
However, corruption, bureaucracy, and a weak financial sector in China worried investors, the survey found. Nonetheless, the majority of respondents believed that China's positives outweighed its negatives, and that the greatest risk was missing out on the Chinese market.
Furthermore, China seems to be leading a new trend in the FDI Confidence Index. For the first time since 1998, the majority of the top ten global FDI destinations were developing countries. China, Mexico, Poland, India, Russia, and Brazil all made the top ten. The survey also found that emerging markets were the most attractive for offshoring IT and business process, as well as for first time investments. France, Italy, Canada, and Australia dropped out of the top ten, while the U.S. remained steady in the second spot.
Asia has also surpassed Europe as the second most attractive region for FDI, with North America holding onto the top spot. The survey attributed much of Asia's gain to China's emergence, as well as to a rebound from the Asian financial crisis of the late 1990's. India was another contributing factor, jumping from 15 to 6 on the index.
In addition, Western Europe is becoming less attractive, the survey found, while Eastern Europe seems to be heating up. Russia and Poland led economies in the Eastern European region, respectively jumping from 17 to 8 and 11 to 4 on the index.
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